December 24: Nepal's shoe industry has been producing shoes at only 40 percent of its capacity, the state-owned RSS reported. In other words, production has decreased by 60 percent. The shoe industry has not been able to produce shoes according to its capacity due to the decrease in exports of shoes and an increase in import as well as smuggling of shoes.

According to Naniraj Ghimire, president of the Footwear Manufacturers Association of Nepal, the Nepali footwear industry has the capacity to produce about 160 million pairs of shoes annually. There are 1,500 shoe factories in Nepal including 1,200 small factories, 200 medium ones and 100 large factories.

Ghimire told RSS that businessmen have invested Rs 30 billion in the footwear industry of Nepal and 60 percent of the investment is bank loan.

According to Ghimire, although the shoe industry has capacity to produce much more, the production is currently limited to 40 percent of the full capacity. At present, the estimated demand for shoes in the domestic market of Nepal is 100 million pairs.

Seventy percent of the demand is fulfilled by domestically produced shoes and 30 percent is imported from abroad.

Before the catastrophic Gorkha earthquake, Nepal used to export 30 million pairs of shoes annually, but now it has dropped to around 6.5 million pairs. Ghimire said that shoes manufactured in Nepal are mostly sold in India and 18 other countries.

According to Rudra Prasad Neupane, the vice president of the association, the problem has surfaced because the government has not implemented the policy related to shoes. Nepal’s shoe industry is unable to produce shoes according to its capacity due to smuggling of shoes, lack of skilled workers, and high interest rates of banks among others. The cost has also increased because the customs duty of raw materials has increased from 10 percent to 20 percent.

According to Neupane, high-ranking government employees are changed frequently due to political instability and therefore their problems never get addressed.

The shoe industry of Nepal has been providing direct employment to 55,000 people. Since Nepal lacks skilled manpower in this sector, half of the workers are foreigners. Neupane said that if the industry can run at full capacity, 125,000 people will get employment.